An average consumer is bombarded anywhere between 3,000 and 10,000 ads every single day. The human brain cannot process that amount of data. So the brain has learned to tune out all these ads. So you're throwing ads at the consumers, but they're not even noticing it.
This is CMO Insider, where you'll get candid takes from marketing power players. My name is Lara O'Reilly. I'm a senior correspondent at Business Insider and I'm here with a marketing legend today. Raja Rajamannar has run marketing at Mastercard for more than 12 years as CMO and now he's switching into the senior fellow role. Thank you so much for joining us.
Thank you very much for having me. Much appreciated.
And I wanted to start with maybe a bit of an existential question for you, which is why does Mastercard do so much consumer marketing? Often times when you get a new credit card or a bank account, you don't get to choose who your payments provider is. So I'd love to know what that involves.
That's such a good question. It's in fact very existential, right? For us as a brand, the key thing is when you are building your brand as Mastercard, you are a connector. So firstly, start with the places where consumers use their cards. The merchant should feel confident that when they see that this is a Mastercard transaction, that they will get paid for it. So it's basically trust and dependability and reliability. That's from the merchant side. Now from the bank's side, I have to build my image with the bank that this is a very, very secure, safe, efficient and effective network, and they need to see value proposition beyond just pure functional elements. But we have to make sure that we get enough into the consumer's mind that when a bank gives them that particular offering, they're very happy. So we don't call ourselves a direct-to-consumer brand. We are a B2B2C brand, which is we are marketing as a business to other businesses which market to their consumers, and we try to fill this entire length of the chain.
And as I mentioned earlier, you were the CMMO, I should have said, at Mastercard for around 12 years, and I imagine you've kind of left the brand on quite a high. But there must have been some challenges along the way, and I wondered if you could talk through maybe like one big challenge you had and how you overcame it. Does anything spring to mind?
At the beginning, I quickly discovered that consumers associate Mastercard overwhelmingly as a credit card company. They say a credit card may make me spend money on things that I don't need and draw me into debt, or that they charge me very high interest rates. And that makes Mastercard brand automatically a negative brand.
And you're a payments company.
We are a payments technology company. We don't issue payments ourselves. So I said this is amazing because we don't issue a single credit card but you ask a normal consumer on the street, they say yeah Mastercard is a credit card company and credit card companies are not good. So my biggest challenge was how do I change that perception. So we started getting into areas where we were trying to earn the consumer's trust. For example, we launched a program with Stand Up to Cancer where we said that when we run some promotions and you as a consumer spend at a restaurant using Mastercard, we will pay a part of that or we'll give a part of the profit that we make to Stand Up to Cancer Foundation. Started as a simple promise but then it was profound. We raised almost $75 million so far for Stand Up to Cancer. And quite unbelievably that group was able to get as many as eight drugs through FDA approval, from molecule discovery to all the trials and eventually to FDA approval. We did this about three or four years back, I can't exactly remember, but Mastercard was one of the top four most favorite brands. So from a category which is considered to be negative to coming to be one of the top four brands in the country is a big deal for us.
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And over your career, you've been quite successful at kind of challenging some of the norms, some of the marketing playbooks or the marketing theory that people often lean upon in this industry. One example is you've kind of famously declared advertising dead and at one point you cut your advertising budget by 70%, which is kind of unheard of. Most marketers are crying out for more budget each year, not less.
I always think of myself as a consumer first before I consider myself a marketer. As a consumer today, do I like advertisements? I hate them. They are an interruption to my experience. I'm watching a beautiful video of maybe some animals in the wild or I'm looking at some Bollywood songs, whatever it is. Suddenly, in less than five minutes, my experience is stopped and I'm shown a stupid ad that I don't care about. And then I'm looking at when is the skip button.
Do you have an ad blocker?
I have an ad blocker, but ad blocker does not do the blocking of some of these streaming companies.
Right. So, and if you don't, your choice is either you pay money—
To keep the ads out or I suffer the ads. What does it tell you? That advertisements are disliked by consumers. So much so that these platforms are telling you, 'Hey, you know what? If you don't want these ads, you pay me money.' That's like blackmail. An average consumer is bombarded anywhere between 3,000 and 10,000 ads every single day. The human brain cannot process that amount of data. So the brain has learned to tune out all these ads. So you're throwing ads at the consumers, but they're not even noticing it. Why would advertising be the right model for us to communicate? The need to communicate with the consumers doesn't go away, but the way we are communicating is not great. And if I'm getting some results, how do I know that these results are happening because of my advertising campaign?
It could happen in spite of it. It could happen because the gasoline prices have come down and consumer behavior shifted. So the attribution mechanisms are extremely weak. And all the platforms are telling you that the ads are working and you've—
That's what they have to tell, right? To sell more. But for us as marketers, we need to understand is this attribution model really reliable. So I cut down my advertising budget by 70%. It is true till now. It's not just done once. We have taken permanently 70% of our advertising dollars out. Nothing happened to the business that is negative.
But you reinvested those dollars.
I reinvested those dollars into other areas like experiential marketing, for example, or new platforms. We started something called priceless.com. We have invested in other areas and that actually has given us disproportionate returns. Now for example, as a result of which, if you look at BrandZ—
So BrandZ is a kind of measure of how much consumers like brands, rate the most valuable brands.
Most valuable brands. Right. Mastercard used to be the 87th most valuable brand. Today it is the 12th most valuable brand. So we have been outpacing our competition whose budgets are substantially higher than ours, big time, and that trend continues to date.
And do you think that's maybe why marketing has a bit of a trust problem in the C-suite?
Marketing has a trust problem for multiple reasons. Now I managed P&Ls and businesses before I became a CMO. In those roles, marketing used to report to me and I would ask them, okay, your budget this month $20 million, tell me what exactly is it getting me for the business? Their answer is my awareness has gone up. My net promoter score has gone up. My brand predisposition has gone up, or my reach has increased—
Right? None of those are on your balance sheet.
I don't care. I want business results. Tell me what it is doing, either the top line or the bottom line, in a credible fashion. Don't give me some marketing mumbo jumbo. I would get really impatient. And they're literally like deer caught in headlights. That is a big problem. Marketers talking their own jargon, their own language and looking at themselves as marketing specialists as opposed to business drivers. A number of CEOs were interviewed in terms of their confidence in the CMOs and the marketing departments. Shockingly, more than two-thirds of the CEOs have said they have zero confidence in their CMOs and in their marketing departments to drive profitable growth. Now, that is a disaster. The CMO role in many companies has been downgraded to report to somebody who reports to the CEO—
To like the chief growth officer or the CRO, or—
Correct. Chief growth officer, chief revenue officer, chief customer officer. Now if you take away customers, revenue, and growth out of marketing, what is left behind? It's really fluff. So the issue is that marketers did not market themselves well. They did not learn the new things that are happening. And now with AI coming, it could be even more devastating if these people don't quickly educate themselves and come on top. Some technologist will now be running through some bunch of agents the entire marketing department, which is not how it has to be.
So AI threatens those marketers, I guess, for myriad reasons, right? One because the thing that used to be hard to spin up, you can now make a thousand creatives in two seconds on Meta or whatever. And also with AI, I imagine that means the CFO and the CEO can very quickly kind of unpick these fluffy marketing metrics that they're being thrown at them. So, what's a marketer to do, I guess?
